Cabot Oil & Gas is a Houston, Texas-based oil and gas company. It is involved in the controversial practice of fracking for methane gas in the Northeastern U.S. in the Marcellus Shale region. Cabot Oil & Gas owns 101[1] of the 1,386 wells in the Marcellus Shale formation, as of 2010. Susquehanna County, Pennsylvania is the main focus of Cabot, which has one of the thickest shale areas in Marcellus.[2] Though lauded as an environmentally-friendly alternative to coal, fracking for gas has been linked to depleting drinking water resources of local communities and polluting the wells of the people living around drill sites. According to a 2010 article in Vanity Fair, "as use of the technique (fracking) has spread, it has been followed by incidents of water contamination and environmental degradation, and even devastating health problems." [3] And according to data released to the EPA, Halliburton, a major supplier of fracking fluid, admitted using 807,000 gallons of diesel-based chemicals in its fluids, in violation of an agreement drillers had with the EPA.[4]

Executive Summary

Cabot Oil & Gas is one of the fastest growing fracking companies in the Marcellus Shale region of the U.S. since it began drilling there in 2006, adding 81 [5]wells alone in 2010. Its northeast Pennsylvania leasehold consisted of 190,000 acres in 2010 and Cabot recently started drilling in the Eagle Ford Shale region in Texas. It has been reporting annual revenues of between $732.17 million and $946 million a year over the past four years, with gross profits of between $480 million and $656 million a year in this period. Its CEO has an annual compensation of $3.06 million. Cabot Oil & Gas has one of the most notorious safety records of the Marcellus Shale drilling companies and in 2010, Pennsylvania's Environmental Chief, John Hanger, described Cabot "as one of the worst oil and gas operators he has seen."[6] It have been accused of numerous safety violations, including polluting rivers and spoiling drinking water by contaminating it with methane gas, most notably in Dimock, Pennsylvania. Cabot Oil & Gas and its executives have also been very active in making partisan political donations, predominantly in favor of Republicans. This company, headquartered in Houston, Texas, has invested significant funds in elections in Pennsylvania and West Virginia, states with large shale deposits, and its PAC was a major spender in the election of the new governor of Pennsylvania, Tom Corbett.

Partisan Political Activity

State Web sites and Open Secrets.org show that Cabot Oil & Gas has been actively donating to pro-fracking candidates and associations since 2009. Although information before 2009 is missing, traditional contributions aren't the only way Cabot has used its money to sway politicians. Cabot, along with other big Marcellus Shale players like Range Resources and Chesapeake Energy, each paid $25,000-$50,000 for Governor of Pennsylvania Tom Corbett's two-day inaugural party.[7]

Cabot's Oil & Gas' PAC and executives together spent $163,450 on politicians and lobbying associations in 2009-2010, the year its own political action committee was started.

Corporate Political Action Committee

With the formation of the Cabot Oil & Gas political action committee (PAC) in 2009, Cabot became a big contributor to candidates and other PACs who support methane drilling and the lenient laws surrounding it. In 2010, Open Secrets shows that Cabot's PAC earned an estimated $84,450 and spent $62,800. Their biggest recipient was Tom Corbett, Republican Governor of Pennsylvania, who supports a no-tax stance for drilling companies in the state. Cabot's PAC also donated $15,000 to Senate and House Republican Campaign Committees and supported America's Natural Gas Alliance, a pro-fracking front group, by donating $5,000.[8]

Here is a breakdown of Cabot Oil & Gas' PAC political donations in 2010:[9]

House: Republican - $8,800, Democrats - $4,800

Senate: Republican - $13,600, Democrats - $0

Most candidates who received contributions are supporters of pro-fracking agendas. William Flores (R-TX), who received $2,400 from Cabot, is on the House Energy and Mineral Resources Subcommittee and the former CEO of Phoenix Exploration Company.

Political Donations by Company Execs

Individual donations were biggest in West Virginia, unlike most methane gas companies, who concentrate their efforts in Pennsylvania. Cabot has a long history in the state and started its methane gas production there before moving on to Pennsylvania and Colorado.[10] In 2008, the company operated more than 3,000 wells in West Virginia.[11] In 2009-2010, Cabot Oil & Gas executives and employees gave $93, 650 to West Virginia candidates and Cabot's PAC.[12] The majority went to Cabot's PAC just like in Pennsylvania, where $7,000 was donated by executives as well.[13]

Lobbying

According to Open Secrets.org, lobbying expenditures for the oil and gas sector have spiked sharply over the past few years - rising to $175,189,824 in 2009 from $134,475,402 in 2008 and $84,555,985 in 2007.[14] Much of this money was spent in the Marcellus Shale region of the U.S., and as "Cabot Oil & Gas is the third-largest drilling lease-holder in the state, behind Range Resources and Chesapeake Energy,"[15] the company's interests are promoted by one of the biggest law firms in the country, Peter Gleason of Kirkpatrick & Lockhart Gates. In 2010, then Governor-elect of Pennsylvania Tom Corbett, formed a panel to discuss methane drilling and a representative from K&L is on "the committee advising Gov.-elect Tom Corbett on environmental and energy issues which includes several prominent lobbyists who represent Marcellus Shale drilling firms."[16]

Front Groups

Cabot Oil & Gas is a supporter of several special interest groups that push for expanded drilling rights and limited or no regulation of fracking.

Cabot Oil & Gas is involved in the following front groups, who donate to pro-fracking candidates and lobbyists: America's Natural Gas Alliance (ANGA)[17], American Exploration and Production Council[18], Energy In Depth,[19] Independent Petroleum Association of America (IPAA),[20] Marcellus Shale Coalition,[21] The Pennsylvania Independent Oil and Gas Association (PIOGA),[22] Western Energy Alliance,[23] West Virginia Oil and Natural Gas Association (where Jeff Hutton, Divisional Vice President, is on the Board of Directors)[24] and Colorado Oil and Gas Association.[25]

Claimed Violations of Safety Rules or Other Laws

Health and Safety Violations Alleged

2011: Cabot Oil & Gas has not yet been fined for the unauthorized dumping of fracking wastewater into Neshaminy Creek, a tributary to the Delaware River. "The Delaware River Watershed is a source of drinking water to more than 17 million people, including big East Coast cities like Philadelphia. The Natural Resource Defense Council (NRDC) declared the Upper Delaware River the country’s most endangered river last year because of fracking in the Marcellus shale."[26] According to the Philadelphia Inquirer, after learning that 1.8 million gallons of treated, but not purified, wastewater had been taken to the Hatfield Township treatment facility, the Delaware River Basin Commission (DRBC), which regulates the watershed, ordered all wastewater dumping from Susquehanna County, Pennsylvania to stop.[27] "According to a report on LehighValley.com, a spokesperson for Cabot said the company knew its waste shouldn’t have been sent to the Delaware River Watershed. But, the spokesperson added that he didn’t know if Cabot knew where PSC was discharging the fluids."[28]

2010: The Marcellus Effect Web site reports that "On April 15, the PA DEP took aggressive action against Cabot Oil & Gas in an attempt to enforce environmental laws meant to protect the public. The DEP ordered Cabot to plug three wells within the next 40 days. These wells are believed to be the source of migrating gas that has contaminated groundwater and the drinking water supplies of 14 homes in the region. Cabot must also install permanent treatment systems in those homes within 30 days." The DEP also suspended all pending permits for new drill sites that Cabot had in processing until it plugs and fixes its wells. The DEP said "the company ignored its responsibilities to safeguard citizens and to protect the natural resources there."[29] The DEP identified five new defective Cabot gas wells and another home water supply that has been affected by methane after new inspections, bringing the number to 14 impacted water wells in the Dimock area. "Cabot is obliged to pay a $240,000 fine, and additionally, $30,000 per month beginning in May until DEP has determined that the company has met its obligations under the 2009 order."[30] CNN reported that "the company's poorly constructed wells contaminated the groundwater of 14 homes with methane. One Cabot well exploded, and others had insufficient or improperly cemented casings. The Houston-based company also spilled about 8,000 gallons of fracking fluid, polluting wetlands and a creek. Cabot blamed the spill on failed pipe connections."[31]

2009: In September, Pennsylvania's Department of Environmental Protection (DEP) ordered Cabot to stop its fracking operations in Susquehanna County, Pennsylvania after it allowed three fracking fluid spills in nine days. The DEP fined Cabot $56,650 for the spills at its Heitsman well on Sept. 16 and a third spill on Sept. 22. "The spills totaled about 8,000 gallons and caused pollution in Stevens Creek and a nearby wetland."[32] The ban was lifted on Oct. 16, after the company revised its pollution prevention and control plan.[33]

Propublica reported in November 2009 that Cabot Oil & Gas Corp. was fined $120,000 for continuing to contaminate local drinking water supplies and ordered to abide by a set of stricter-than-usual probationary regulations before continuing its methane gas drilling operation in Pennsylvania. "The charges and conditions against Cabot were outlined by the Pennsylvania Department of Environmental Protection in a 23-page document that lists each of Cabot’s offenses – from failure to properly cement wells to failure to maintain and submit proper records – and asks the company to acknowledge and address the findings. The fine is the largest issued by the Pennsylvania agency to a gas company."[34]

Lawsuits

2010: Penn Energy.com reported in December that Cabot Oil & Gas "has finalized a settlement agreement and new Consent Order with the Pennsylvania Department of Environmental Protection (PaDEP)" to pay $4.1 million to 19 Pennsylvania families in Dimock, Pennsylvania. The settlement refers to the 2009 charges brought against Cabot for water safety violations. Cabot must also offer whole house water treatment systems to the families who want them. "Additionally, upon compliance with the terms of this settlement agreement, Cabot is allowed to resume well completion operations in the Dimock/Carter Road area. These operations are expected to commence in the first quarter of 2011 with new drilling in the Dimock/Carter Road area commencing in the second quarter."[35]

2009: In a separate federal suit than the $4.1 million settlement in 2010, 15 Dimock, Pennsylvania families sued Cabot Oil & Gas for contaminating their drinking water and local waterways. Propublica reported that "the civil case, filed in U.S District Court in Scranton, Pa., seeks to stop future drilling in the Marcellus Shale by Cabot Oil & Gas near the town of Dimock. It also seeks to set up a trust fund to cover medical treatment for residents who say they have been sickened by pollutants. Health problems listed in the complaint include neurological and gastrointestinal illnesses; the complaint also alleges that at least one person's blood tests show toxic levels of the same metals found in the contaminated water. The suit alleges that Cabot allowed methane and metals to seep into drinking water wells, failed to uphold terms of its contracts with landowners, and acted fraudulently when it said that the drilling process, including the chemicals used in the underground manipulation process called hydraulic fracturing, could not contaminate groundwater and posed no harm to the people who live there."[36]

Revenue and Profits

2010[37]
Revenue: $694.6 million
Net Income: $103.4 million (Gross Income stats not available as of February 22, 2011)

Senior Executives

Dan O. Dinges: Chairman of the Board, President and Chief Executive Officer - Reuters states Dinges has been at Cabot Oil & Gas Corp since May 2002. "He joined Cabot Oil & Gas Corporation as President and Chief Operating Officer and as a member of the Board of Directors in September 2001. Dinges came to Cabot after a 20-year career with Samedan Oil Corporation, (a subsidiary of Noble Affiliates, Inc., now Noble Energy Inc.). He served as Samedan’s Senior Vice President, as well as Division General Manager for the Offshore Division from 1998 to September 2001. He is a Director of American Exploration & Production Council, Spitzer Industries, Inc., Texas Energy Education Partnership, Boy Scouts of America - Sam Houston Area Council and Palmer Drug Abuse Program."

Scott Schroeder: Chief Financial Officer and Vice President - Schroeder has served "at Cabot Oil & Gas Corporation since February 2001. Schroeder served as Vice President and Treasurer for the Company since 1998. He joined Cabot Oil & Gas in October 1995 as Assistant Treasurer. Before joining the Company, Schroeder held various management positions with Pride Petroleum Services and DeKalb Energy Company."[44]

Jeffery Hutton: Vice President of Marketing - "He joined the Company in 1985 as a Marketing Representative. From 1989 to 1994, Hutton held marketing positions of increasing responsibility including Manager of Gas Control, Manager of Market Development and Acting Manager of the Marketing Department. He was named to his current position in February 1994. Prior to joining Cabot Oil & Gas, he worked for Columbia Gas Systems."[45]

Lisa Machesney: Vice President, Managing Counsel and Corporate Secretary - Reuters states that "Machesney joined Cabot Oil & Gas in 1985 as an attorney and served as Corporate Secretary and Managing Counsel prior to her current position. Before joining Cabot Oil & Gas, she was an attorney with ANR Pipeline Company in Houston."[46]

Phillip Stalnaker:Vice President and Regional Manager, North Region - Reuters states that from February 2006 to July 2009, Stalnaker served as Regional Manager for the Western Region and from 2001 to 2006 as Engineering Manager, Western Region. Prior thereto, Mr. Stalnaker served in various capacities of increasing responsibility within the drilling, production and reserve engineering departments at Chevron Corporation."

James (Matthew) Reid: Vice President, Regional Manager, South Region - "From February 2006 to July 2009, he served as Regional Manager, Gulf Coast Region and from 2001 to 2006 as Manager, Regional Operation for the Gulf Coast Region. Prior thereto, Reid served in various operating and engineering positions with Texaco, Inc., Texas Gas Exploration, Total Minatome, Energy Development Corp. and Broughton Operating Corp."[47]

Todd Roemer: Principal Accounting Officer, Controller - Reuters states that Roemer has been appointed as Principal Accounting Officer, Controller of Cabot Oil and Gas Corporation effective March 31, 2010. He was with PricewaterhouseCoopers LLP from 1996 to February 2010 as Senior Manager since September 2003.

Robert Drake: Vice President, Information Services and Operational Accounting - Reuters says since joining Cabot Oil & Gas in 1980, Drake has held positions of increasing responsibility in both the Accounting and Information Systems departments. He was named to his current position in November 2002. Prior to joining the Company, he worked at Panhandle Eastern and Specialty Retailers Inc.

Abraham Garza: Vice President, Human Resources - "Garza joined Cabot Oil & Gas in August 1995 as Director, Human Resources. He was named to his current position as Vice President, Human Resources in May 1998. Before joining Cabot, Garza served as Human Resources Director at Texfield, Inc. and in various management positions of increasing responsibility with Marathon Manufacturing Company."[48]

Steven Lindeman: Vice President, Engineering and Technology - "Lindeman, who began his career as a drilling engineer with Cabot in 1982, has held various management positions before moving to Houston in 1992, where he was most recently director of engineering."[49]